Why Pro Medicus Limited (ASX:PME) shares are smoking hot today

Shares in software-as-a-service medical imaging business Pro Medicus Limited (ASX: PME) rocketed more than 10% higher to $7.95 in trade today after the group announced a new deal for its Visage 7 platform with U.S. healthcare group Mercy Health.

The deal is reportedly worth more than $15 million over the next seven years in what Pro Medicus’s ebullient CEO described as “an industry defining deal for us”.

The agreement reportedly means that some 25 million images from Mercy’s current archive can be combined onto the interoperable Visage 7 system in a “totally modular fashion”.

The project is scheduled for completion by early 2019 and its successful implementation will be another big step forward for Pro Medicus in its journey to become a market leader in the online medical imaging platform space.

“Our goal is to be the single enterprise imaging platform for all medical images and multimedia within the healthcare enterprise and this is a very significant step in that direction,” boasted the CEO.

That confidence might not be misplaced as Pro Medicus looks one of the ASX’s best up-and-coming companies as it operates in huge global addressable markets and appears to have a market-leading product that offers the attractive economic characteristics of sticky, recurring revenues, on high gross profit margins.

Pro Medicus’s robust outlook is no secret anymore though, with the company valued at more than $730 million despite posting revenue and profit of just $16.6 million and $5.1 million respectively for the six-month period ending December 31 2017.

Admittedly these are backward looking stats and the group’s high profit margins are a standout feature given it has plenty of new revenue to come online as the result of its new contract wins.

I’d rate the stock a hold for now, but wouldn’t be surprised to see it get a wriggle on into the new financial year.

Others on an arguably even bigger tear in the software-as-service space include Wisetech Global Ltd (ASX: WTC) and Xero Limited (ASX: XRO), both of which are already several multiples the market value size of Pro Medicus.

3 More Revolutionary Aussie Companies to Back for 2018

We’re living in one of the most exciting times in investing history. Innovation and a booming culture of entrepreneurship are constantly creating new companies with the potential to make forward-thinking investors very rich. Now more than ever, one small, smart investment could make a huge difference to your wealth.

That’s why at The Motley Fool we’ve been scrutinizing the ASX to uncover the kinds of companies that we believe could turn into the next Pro Medicus

We’ve found three exciting companies that we believe re poised to perform in the new year. Click here to uncover these ideas!

Motley Fool contributor Tom Richardson owns shares of PRO Medicus Ltd. and Xero.

You can find Tom on Twitter @tommyr345

The Motley Fool Australia owns shares of and has recommended PRO Medicus Ltd. The Motley Fool Australia owns shares of WiseTech Global and Xero. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The 5 mining stocks we’re recommending in 2019…

For decades, Australian mining companies have minted money for individual investors like you and me. But if you believe the pundits and talking heads on TV, those days are long gone. Finito! Behind us forever…

We say nothing could be further from the truth. To earn the really massive returns, you’ve got to fish where others aren’t fishing—and the mining sector could be primed for a resurgence. That’s why top Motley Fool analysts just revealed their exciting new research on 5 ASX miners they believe could help you profit in 2019 and beyond…


The best way we see to play the global zinc shortage… Our #1 favourite large-cap miner (hint: it’s not BHP)… one early-stage gold miner we think could hit the motherlode… Plus two more surprising companies you probably haven’t heard of yet!

For free access to our brand-new research, simply click here or the link below. But be warned, this research is available free for a limited time only, and we reserve the right to withdraw it at any time.

Click here for your FREE report!